NZ dollar slips as investors await Bernanke’s take on QE

NZ dollar slips as investors await Bernanke’s take on QE

By Paul McBeth

May 22 (BusinessDesk) - The New Zealand dollar edged lower in the local session as investors hold off from making any decisions ahead of Federal Reserve chairman Ben Bernanke’s Congressional testimony, where he’s expected to give his view on whether the US central bank will start unwinding its quantitative easing programme.

The kiwi slipped to 81.47 US cents at 5pm in Wellington from 81.60 cents at 8am, down from 81.82 cents yesterday. The trade-weighted index fell to 76.82 from 77.10 yesterday.

Bernanke will testify in front of a House of Representatives committee on Wednesday in Washington, and investors will be looking for his view on whether the Fed will start unwinding its $85 billion a month asset purchase programme. Traders have been growing increasingly upbeat about the prospects of the Fed tapering off QE this year as the world’s biggest economy shows growing signs of life.

“Regardless of what Bernanke says, whether he tries to jawbone the market that’s he’s not going to remove the stimulus, the market has already priced in a better outlook for the US economy,” said Dan Bell, currency strategist at HiFX in Auckland. “It’s not surprising to see the New Zealand dollar come off those lows on Friday and consolidate for the time being, but overall, it does look like the kiwi/US does go lower.”

Traders will also be keeping tabs on tomorrow’s release of the HSBC flash purchasing managers’ index, an early indicator of China’s manufacturing, to get a steer on how the world’s second biggest economy is faring.

The kiwi was little changed at 83.29 Australian cents from 83.40 cents yesterday after a Westpac Banking Corp-Melbourne Institute survey showed consumer confidence plunged in Australia in May in its biggest decline in 17 months.

The local currency dropped to 83.56 yen from 83.82 yen yesterday after the Bank of Japan affirmed its plan to double its monetary base in a bid to stoke inflation to an annual 2 percent pace within two years.

The kiwi fell to 63.06 euro cents from 63.46 cents yesterday, and increased to 53.78 British pence from 53.66 pence.

(BusinessDesk)

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